The Sarcasm Report v.186

iShares Short Treasury Bond ETF

Average Yield to Maturity: 0.15%

Expense Ratio: 0.15%

Perfect!

It is just like cash, only it isn't cash. It's a professionally managed bond fund! Genius!

Check out the fund's chart. What's not to like? $2.4 billion in assets! Very popular!

July 20, 2009
Focus on short end of yield curve, PIMCO says

Focus as you patiently await the end of ZIRP! 5 years so far! But we really, really, really mean it this time!

It's at an end! Cutting out! Kaput! Finished! Drop the curtain! Break camp! Pull up stakes! Finis! Absolutely, positively it! Not pulling your leg! Down the road! We swear we won't ever be back! Ain't gonna happen! Forget about it! Shutting it down! Lost our lease! Can't find it! Don't care! We're done! Closing shop! Putting up the shutters! Bolting the doors! Slamming them closed! Gonna board the place up! Nailing it shut! Big nails! Nothing gets in or out! Sealing it off! We're history! We really! Really! Really! Mean it! We're not jerking your chain on this! No snow job! Not bluffing! No kidding!

This concludes today's sarcasm report. :)

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ZIRP: Great Depression vs. Great Recession

The following chart compares the 3-month treasury bill yield in the aftermath of the Great Depression to the 3-month treasury bill yield in the aftermath of the Great Recession.


Click to enlarge.

For the record, I am not predicting World War III (nor would I expect it to even remotely solve our long-term ZIRP problem as effectively as World War II did).

I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones. - Albert Einstein

I think you can see why I might be fond of ultra long-term inflation protected treasuries and I-Bonds. You might also understand why I might be somewhat skeptical of rising interest rate theories.

I believe we are trapped in ZIRP much like Japan has been since their housing bubble popped in the early 1990s (which will become all too apparent when the next recession hits, whenever that is).

We might temporarily escape from our padded cell at some point, but we'll never get the straight-jacket off, much less get past the search lights, the dogs, the barbed wire fences, and Janet Yellen, our trusted security guard. That's just asking too much, lol. Sigh.

Gallows humor.

February 11, 2014
Janet Yellen to Emerging Markets: Good Luck

Monetary policy is hard enough without having to worry about the spillover effects to other countries that should take care of themselves.

Contrary to the opinion of those who think the stock market continues to go up easily from here and that vast riches await those willing to swing for the fences at any price, monetary policy is hard. For what it is worth, that's what I'm reading into what she has to say anyway.

This is not investment advice.

Source Data:
St. Louis Fed: 3-Month Treasury Bill: Secondary Market Rate
NBER: US Business Cycle Expansions and Contractions

charts fed chairman housing japan sarcasm stock market treasuries

Disposable Personal Income vs. CPI

The following scatter chart compares annual disposable personal income per capita growth (bottom scale) to the annual increase in the consumer price index (left scale).


Click to enlarge.

From 1960 to 2013:

1. 2009 was the worst year for disposable personal income growth per capita. It was also the record low year for consumer price inflation.

2. 2013 was the second worst year for disposable personal income growth per capita. Once again, inflation came in below expectations.

The following chart shows recent annual disposable personal income per capita growth. I'm using the monthly data instead of the annual averages this time to more adequately show all the gory details.


Click to enlarge.

January 10, 2014
Fed's Bullard: Inflation to pick up in 2014

WASHINGTON (MarketWatch)-- St. Louis Fed President James Bullard said Friday he expects inflation to pick up this year, despite having been surprised by lower prices last year.

1. Good luck on that inflation theory!
2. Brace for more surprises!

jjchandler.com: Tombstone Generator

Click to enlarge.

This is not investment advice, but damn.

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts deflation employment inflation japan sarcasm stock market treasuries

Our Economy Distilled (Musical Tribute)

The following chart shows the annual change in beer, wine, and distilled alcoholic beverage wholesalers' sales.


Click to enlarge.

Don't let the trend line concern you. As seen in the next chart, I assure you that we are more than prepared to throw a legendary party!


Click to enlarge.

Just look at all that inventory accumulation. Yes, sir. Somebody must know something. The party's definitely coming!

Saturday night - high
Saturday night - high 'n' dry
Saturday night - I'm high
Saturday night - high 'n' dry

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts deflation musical tribute sarcasm stock market videos

JOLTS of Déjà Vu

The following chart shows the semiannual average of the number of job openings divided by the number of hires (as seen in the Job Openings and Labor Turnover Survey).


Click to enlarge.

Note that this ratio appears to be a leading indicator for the last two recessions (too bad there isn't more data to backtest it further).

When the view out the front window (job openings) looks worse than the view out the rear window (hires), then there may be reason for concern (again).

The next chart shows the annual percentage change in the semiannual data.


Click to enlarge.

Let me guess. We can blame the "recent" decline on two years of bad weather?

The financial experts are bracing for this economy to accelerate in 2014. I have but one question. Which direction? Sigh.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts employment sarcasm

The Sarcasm Report v.185

Click to enlarge.

The blue line shows the annual average of the St. Louis Fed Financial Stress Index and the Kansas City Financial Stress Index.

The red line shows the negative of the annual average of the real S&P 500 Index (December 2013 dollars).

1. The key to maintaining the stock market's currently lofty level is to keep the financial stress at a near record low. That's right. Keep it there permanently. Just say no to stress.

2. The key to maintaining the financial stress at a near record low is to keep the stock market at its currently lofty level. That's right. Keep it there permanently. Just say no to stress.

What could possibly go wrong with this circular reasoning strategy? As seen in the chart, there hasn't been this little financial stress in the system since the top of the housing bubble in the mid 2000s! Oh, what a carefree time that was!

I am very optimistic about our long-term future!! ZIRP! Employment growth! Real GDP growth! Real median household income growth! Uncharted territory growth! You name it! It's going to be an adventure.

February 11, 2014
ASX bets on derivatives clearing

"We don't even celebrate trillions any more," the Englishman recently elevated to the top job of global clearing house LCH Clearnet, told The Australian on a recent visit to Sydney.

It's not quite so flippant a comment as it might seem. The arcane world of over-the-counter derivatives such as interest rate swaps that Davie inhabits turns over $600 trillion of notional value a year, so a trillion is not far off being a rounding error.

This concludes the sarcasm report.

Source Data:
St. Louis Fed: Custom Chart

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Amusingly "Cool" Map of the Day

January 30, 2014
Map: 'How Much Snow It Typically Takes to Cancel School in the U.S.'

Using data "taken from hundreds of various points from user responses...interpolated using NOAA's average annual snowfall days map," Trubetskoy made a map showing how much snow it typically takes to close schools in the U.S. and Canada.

charts